This research theme focuses on the relationships between innovation, exporting and growth in SMEs. It contributes to the main themes on the drivers of growth and the barriers to innovation, exporting and growth.

Research Activities

An initial survey of existing research on innovation and exporting was completed for April 2013. Subsequent activity has focussed on the dynamics of open innovation, the benefits of innovation support, persistent and intermittent exporting and the effects of locality on innovation success.

Research Finding

SMEs which have a track record of innovation are more likely to export, more likely to export successfully, and more likely to generate growth from exporting than non-innovating firms. Both internal and eco-system factors are important in shaping SME innovation and exporting.

Locality can have a positive effect on innovation outputs through direct linkages between SMEs and related organisations, through imitation effects and through spill overs. The ability of firms to benefit from external knowledge will depend on both their ambition and encoding capacity for knowledge.

Open innovation has both dynamic and social benefits. Dynamic benefits mean that firms learn from open innovation in one period to be better innovators in subsequent periods. Social benefits mean that open innovators stimulate increased knowledge diffusion and raise innovation in otherwise un-related firms through ‘externalities of openness’.

Innovation support has significant longer term and survival benefits. Longer term benefits depend on the form of public support being provided but may occur through both legacy effects related to behavioural additionality and improved innovation outputs. Innovation support also increases firms’ survival probability by around 3 per cent over a decade.

Prof Jim Love and other members of the team were asked to undertake some data analysis for UKTI/BIS on ‘intermittent exporters’.  This research will use data from the UKTI International Business Strategies, Barriers & Awareness Survey (IBSBA) and data from the BIS Small Business Survey (SBS). Profs Jim Love and Stephen Roper were invited by the European Commission Directorate General for Enterprise and Industry as external experts at the validation workshop on the European Sector Innovation Scoreboard (ESIS). On 12 September, this gathered leading European experts in the field of measuring services innovation, to take stock of achievements so far, discuss on-going activities towards developing a European Sector Innovation Scoreboard, and consider methodology and preliminary results.


Innovation, Innovation Strategy and Survival (Research Paper No 17)

Innovation has a recognised effect on survival. Undertaking more risky innovation may increase the risk of business failure, while more incremental innovation may reduce the risk. This paper investigates how firms’ innovation strategy choices affects the relationship between innovation and firm survival. The research suggests the notion of “survival additionality”, i.e. firms receiving public support derive more persistent benefits from innovation than firms which did not receive public support.

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Openness and innovation performance: are small firms different? (Research Paper No 12)

Traditionally, literature on open innovation has concentrated on analysis of larger firms. This paper explores if and how the benefits of openness in innovation are different for small firms compared to medium and large ones.

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UK Mid-Market – ‘Overlooked Middle’ or Lair of the Hidden Champions? (Insights Paper No 2)

This paper highlights two alternative views of the UK mid-market. The ‘overlooked middle’ perspective emphasises that UK policy has been symbolic rather than substantive, lacking scale and consistency and the ‘Hidden Champions’ perspective which recognises the rapid growth of leading MSBs and the lack of acknowledgement they receive in the UK.

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Supporting sustained growth among SMEs (White Paper No 7)

Among SMEs high growth is often episodic and not sustained. This paper reviews a number of international support measures designed to give SMEs the capabilities and resources to sustain fast growth.

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Gearing up for Growth Vouchers (Insights Paper No 1)

This paper suggests some key lessons for the Growth Vouchers scheme based on the experience of the Nesta Creative Credits Project.

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Paradigm Shift or Business as Usual? (Research Paper No 6)

This paper explores explores the claims of a ‘paradigm shift’ towards firms using open innovation as a conscious strategic choice.

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An Experimental Approach to Industrial Policy Evaluation: the case of Creative Credits (Research Paper No 4)

This paper considers the arguments for applying experimental methods to industrial policy measures and propose an experimental policy evaluation approach.

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SME Innovation, Exporting and Growth (White Paper No 5)

SMEs which have a track record of innovation are more likely to export, export successfully and generate growth from exporting than non-innovating firms. This paper explores the existing evidence.

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